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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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RELEVANT ISSSUES TO MODERNIZE MERCOSUR
Areas in which it is possible to move forward based on the current rules


by Félix Peña
September 2021

English translation: Isabel Romero Carranza


 

The problems that Mercosur faces today are largely the result of the changes that have taken place since its creation in 1991, both in the global and regional realities. They also come as a consequence of the economic and political difficulties that often affect the priorities of its member countries and are also a result of the work methods used in the joint actions of the partners, particularly for the adoption of formal decisions that require consensus.

In part, the problems could be attributed to the fact that Mercosur was designed at a historical moment that can be considered has been outpaced by the new realities. Those who believe this tend to consider that some of its approaches, rules and policies are becoming obsolete.

At least three different options are seen as feasible to address the problems faced by Mercosur. These are: 1) to recognize its possible obsolescences, and that those who so consider gain independence by denouncing the constituent Treaty; 2) to address the amendment of some of its fundamental ground rules and, more specifically, the Treaty of Asuncion, and 3) that the four member countries agree on policies aimed at taking full advantage of the current constitutive rules, without the need to resort to their possible amendment but without discarding the possibility that it might be convenient to promote new constitutive rules in the future.

Within the scope of the third option, substantial improvements in Mercosur's objectives and functioning could be sought in at least three areas. These are the conciliation of national interests necessary for the adoption of decisions that impact reality and are effective; the sectoral agreements; and the new issues that affect international trade relations, in particular that of climate change. In this opportunity, we will refer only to the first of these three.


Mercosur is eager to be modernized and to adapt its objectives and work methods to the current times and, above all, to those of the future. In fact, it is going through a critical phase in which its very existence is being questioned.

The problems it faces are largely the result of the changes that have taken place since its creation, in 1991, both in the global and regional realities. They are also the result of economic and political difficulties that often affect the priorities of its member countries. But they may also be the result of the work methods used in the joint actions of the members and, in particular, for the adoption of formal decisions that require consensus.

In part, the problems could be attributed to the fact that Mercosur was designed at a time that has been outpaced by the new realities. Those who hold this view are inclined to consider that its approaches, rules and policies have become obsolete.

At least three options are considered feasible to address the problems faced by Mercosur. All three are possible, but their direct or indirect consequences could be very different:

  • the first option would be to recognize the eventual obsolescence of Mercosur, and the country that considers it appropriate could gain independence through the denunciation of the constituent Treaty, as provided for in its Chapter 5;

  • the second option would be to undertake the process of modifying the fundamental ground rules and, more specifically, those of the Treaty of Asunción, in particular Articles 1, 2 and 5, among others (see the May and September 2020 editions of this newsletter). It is an option with uncertain timeframes and results, which could have significant and diverse political costs in each country, since it would require the approval of the respective parliaments, among other factors; and

  • the third option would be for the four member countries to agree on policies aimed at taking full advantage of the current constituent rules, without the need to resort to their amendment and without discarding the possibility that it might be advisable to promote new rules at a later date.

Within the framework of this third option, we will refer to the three areas in which some substantial improvements in Mercosur's objectives and functioning could be attempted. These are certainly not the only ones, but they are those which often evince shortcomings in relation to the objectives and the effectiveness of the shared work carried out by the four current partners. These improvements would not necessarily require reforms to the Treaty of Asunción or the Ouro Preto Protocol.

The first area would be that of the alignment of national interests. This is necessary in order to achieve the adoption by consensus of joint decisions of the Mercosur members, which could then actually impact reality and become truly effective. Specifically, what is proposed would be to undertake an initiative aimed at strengthening the functions of the so-called Administrative Secretariat, especially in relation to the process of preparing and adopting joint decisions that require the consensus of all the members. The aim would be to strengthen its capacity to facilitate, with its contributions and initiatives, the complex task of reconciling the various interests and priorities of each of the partners in the adoption of those Council decisions that require consensus, as established in the Ouro Preto Protocol.

This would not imply opening a debate on potential supranational functions of the Mercosur Secretariat, that is to say, functions that would mean that those who carry them out would be considered as being above the national states. However, it would be necessary to provide the Secretariat with the proper technical capabilities to facilitate the complex task of reconciling the various positions of the member countries, particularly with regard to the decisions that must be adopted by consensus. Helping to build such consensus would then be a key role of a strengthened Mercosur Secretariat.

This would also require the Secretariat to play an active role in setting up networks of academic institutions and technical think-tanks, with the involvement of experts from institutions of "action-oriented thinking" from the four member countries, as well as from international organizations operating in the region, such as ECLAC and INTAL (see this November 2020 edition of our newsletter).

In principle, the Mercosur Secretariat already has an organizational setup that would allow it to fulfill this function. For example, the sectors of Technical Advisory, Regulations, Documentation and Outreach have the expertise and competencies that, with adequate political and budgetary support, could turn the Secretariat into a valued actor for the ongoing negotiating efforts needed for the conciliation of the various national interests within the Mercosur sphere.

Strengthening its role in the contribution of the experience, knowledge and intelligence needed to harmonize the diversity of interests and visions of its member countries, and thus achieve the necessary consensus for the adoption of its decisions, is a worthy contribution that may help enhance Mercosur's role in the productive development and international insertion strategy of its member countries.

The remaining two areas, which we briefly mention on this occasion, will be discussed at greater length in our October newsletter.

One of them is related with the sectoral agreements provided for in Article 5, paragraph d) of the Treaty of Asuncion and regulated in Decision No. 3 of 1991. We will deal with it together with the instrument of partial scope agreements, provided for in the 1980 Treaty of Montevideo that created LAIA, linking them with another relevant aspect of Mercosur's integration strategy, which is that of joint action with the countries of the Pacific Alliance and with other countries of the Latin American region.

The other is the full inclusion in Mercosur's work agenda of issues that have acquired greater relevance in recent times and, in particular, those related to climate change.


Recommended Reading:


  • Actis, Esteban; Creus, Nicolás, "La Disputa por el Poder Global. China contra los Estados Unidos en la crisis de la pandemia", Capital Intelectual, Buenos Aires 2020.
  • Capdevila, Inés, "El caos de Afganistán, un sismo con réplicas en América Latina", newspaper "La Nación", August 29, 2021, p. 4.
  • Elizondo, Marcelo, "Una alarmante pérdida de participación en el total de exportaciones latinoamericanas", Foreign Trade Supplement, newspaper "La Nación", August 26, 2021, p. 3.
  • Gokhale, Vijay, "The Long Game. How the Chinese Negotiate with India", Penguin Books, India 2021.
  • Hufbauer, Gary Clyde, "Divergent climate change policies among countries could spark a trade war. The WTO should step in", Trade and Investment Watch, Peterson Institute for International Economics (PIIE), PIIE Insider, September 2021.
  • Keohane, Robert O., "After Hegemony. Cooperation and Discord in the World Political Economy", Princeton University Press, Princeton, New Jersey 1984.
  • Koonin, Steven E. "Unsettled. What Climate Science Tells Us, What It Doesn´t, And Why It Matters", BenBella Books, Inc., Dallas,TX 2021.
  • Kuper, Simon, "The Barcelona Complex. Lionel Messi and the Making -and Unmaking- of the World's Greatest Soccer Club", Penguin Press, New York 2021.
  • Lee, Kai-Fu, "AI Super-Powers. China, Silicon Valley, and the New World Order", Houghton Mifflin Harcourt, Boston-New York 2018.
  • Lomborg, Bjorn, "False Alarm. How Climate Change Panic Costs US Trillions, Hurts the Poor, And Fails To Fix The Planet", Basic Books New York 2020.
  • Malacalza, Bernabé; Tokatlián, Juan, "¿Es posible la desintegración del Mercosur?", in DiarioAR.com, Opinion, July 25, 2021, http://www.eldiarioar.com/.
  • Milner, Helen V.; Moravcsik (editors), "Power, Interdependence, and Non-State Actors in World Politics", Princeton University Press, Princeton-Oxford 2009.
  • Peña, Félix, "Algunas ideas para sacar al Mercosur del estancamiento", newspaper "Clarín", Opinion Section, August 2, 2021, p. 22.
  • Rashid, Ahmed, "TALIBAN. The Power of Militant Islam in Afghanistan and Beyond". I.B.TAURIS, New York 2011.
  • Ribeiro Hoffman, Andrea; von der Vieuten, Anna (editors), "Closing or Widening the Gap? Legitimacy and Democracy in Regional Integration Organizations", Routledge, London-New York 2016.
  • Thomas, Vinod, "Realizing the benefit of a global carbon tariff", East Asian Forum, 26 August 2021, http://www.eastasianforum.org.
  • Stewart, Rory, "The Places Between", A Harvest Original-Harcourt Inc., New York-London 2004.
  • Wallerstein, Immanuel; Lemert, Charles; Aguirre Rojas, Carlos, "Uncertain Worlds. World-Systems Analysis in Changing Times", Routledge, London-New York 2016.
  • Walt, Stephen M., "The Origins of Alliances", Cornell University Press, Ithaca- London 2013.
  • Wendt, Alexander, "Social Theory of International Politics", Cambridge Studies in International Relations, Cambridge 1999.
  • Woodward, John, "Eyewitness Climate Change", DK Penguin Random House, London-Delhi 2021.
  • Wright, John, "US-China rivalry needs more clarity and less polarity", East Asia Forum, August 26, 2021, http://www.eastasianforum.org.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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